Healthy Economy Leaves Surplus for Welfare

Funds: County officials are eyeing ways to spend the unexpected $7.3-million windfall resulting from a robust job market.

Ventura County's welfare department has amassed a $7.3-million surplus for funding public aid this year, the result of a dramatically dropping caseload brought on by a healthy job market.

The unexpected pile of cash is a distinct change from just a few years ago, when funding for social service programs was being cut and services for single, unemployed mothers were minimal.

Windfall dollars are being eyed to pay for a variety of projects, from expanding a car-loan program for welfare-to-work participants to setting up a "rainy day" reserve. County officials say they may plow some of the money, which was accumulated last fiscal year, into expanded programs aimed at moving the most entrenched welfare population into employment.

Indeed, the county has so much welfare funding that it cannot spend it all before the fiscal year ends in June, said Herb Alloway, a welfare budget analyst. Current projections show the county could add at least $5 million to the unused pot next year, Alloway said.

It is a predicament that delights--and worries--county welfare administrators. On the one hand, the extra money brings opportunity to design a welfare-to-work program uniquely fitted to Ventura County's needs. But it also brings up the thorny issue of how best to spend it.

"We used to have problems with not having enough money," said Human Services Agency Director Barbara Fitzgerald. "Now we have problems with having too much."

A committee made up of county administrators has been meeting to make recommendations on how the growing reserve should be spent, Fitzgerald said. The panel is expected to lay out proposals during June budget hearings, she said.

The issue highlights an unusual situation for Ventura County and most other California counties. Overall, counties this year amassed nearly $500 million in unused welfare funding.

They were able to do so because of the nature of the new federal funding system. Under the 1996 welfare overhaul, states were awarded a fixed dollar amount--a block grant--based on 1994 caseload numbers, which were in many instances at historic highs.

Although the number of welfare cases has plummeted, counties still get the same level of funding. In Ventura County, 10,626 families were on welfare in January 1995, when caseloads reached their peak. That number plunged nearly 40% by February to 6,561 families. A typical family is made up of a single woman with two children.

California is not alone in realizing a windfall. According to a recent federal study, 46 states were expected to have additional resources.

"It's been an eye-opener," Fitzgerald said. "I really expected the state or federal government to keep some of those funds for themselves. But they haven't--yet."

Indeed, some welfare administrators are nervous about the idle pot of money. Gov. Gray Davis has proposed cutting the amount of welfare funding that counties receive next year in part because huge surpluses are again projected, said Frank Mecca, executive director of the California Welfare Directors Assn.

But social service directors across the state argue that CalWORKS, the state's welfare reform law enacted in January 1998, allows counties to roll over any unspent money into the next year's budget, Mecca said. Many counties are still getting redesigned welfare programs up and running and need more time to spend the money allotted to them, he said.

Other counties want the option of adding to their welfare reform plans, Mecca said. Counties are under pressure to continue moving recipients to work so that the state is not penalized for failing to meet strict federal reduction quotas.

"The folks that have the fewest barriers to employment are getting a job," he said. "The residual population is one with many needs. There may be fewer of them, but the expense involved in helping them is going to be a lot higher."

Ventura County Supervisor Frank Schillo said decisions on how to spend the dollars need to be made quickly before the money is snatched away.

"I would hate to see us lose money because we are not up to speed," he said.

The money comes from different sources and carries some restrictions on how it can be used. The largest chunk, $5.3 million, was left over from the county's 1997-98 welfare allocation of $28 million. The rest of the money is so-called performance incentives awarded to the county for putting recipients to work.

Suggestions on how to use the county's surplus vary. Fitzgerald said she favors putting at least a portion of it into a reserve fund to be used when the economy turns sour and caseloads again begin climbing. Supervisor Kathy Long agreed that would be a prudent move.

"We have a roller-coaster economy that can change people's lives overnight," she said. "Some has to be conservatively tucked away into a local trust fund."